Micron: A Most Promising Turn of Events

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Micron Technology, you see, has recently presented figures that were, to put it mildly, rather ripping. A truly dazzling display, though the stock market, in a fit of pique or perhaps just sheer contrariness, didn’t immediately burst into applause. It had, one gathers, already enjoyed a most agreeable run – a 350% upward surge, if you please – and one suspects the market, like a particularly fussy aunt, was determined to find something to grumble about. A dash of ‘sell the news’ behavior, as the chaps in the city call it.

Let us, therefore, delve a little deeper into the affairs of this memory-making enterprise, and see if we can discern whether this recent buoyancy is likely to continue, or if we are witnessing merely a fleeting moment of good fortune. It’s a bit like trying to predict the weather in the English countryside – one can hazard a guess, but certainty is a distant dream.

A Right and Proper Boom

It appears Micron is benefiting, as one might say, handsomely from a surge in the price of memory. Both DRAM – that’s Dynamic Random-Access Memory, for those not in the know – and NAND, are experiencing a shortage, all thanks to this rather frantic build-up of infrastructure for Artificial Intelligence. Nearly 80% of Micron’s revenue, it seems, derives from DRAM, with the remainder largely accounted for by NAND. A comfortable arrangement, one would think.

The company, you see, is one of only three major manufacturers of DRAM, which puts it in a rather enviable position. The current demand is being driven by this newfangled High-Bandwidth Memory – HBM – which is bundled with AI chips, like those Graphics Processing Units – GPUs – to give them a bit of extra oomph. The trouble is, HBM requires a good deal more wafer capacity – upwards of three times, in fact – than ordinary DRAM. A spot of bother, naturally, but one that presents a rather splendid opportunity for those prepared to meet the challenge.

Micron anticipates that both the DRAM and NAND markets will remain rather constrained for some time to come. They are, therefore, expanding their manufacturing capacity to keep pace with demand. A rather ambitious undertaking, involving a capital expenditure – or ‘capex’ as the moderns say – of no less than $25 billion this fiscal year. Management believes that as AI evolves, the demand for memory will only increase. A sensible observation, one might add.

For its fiscal second quarter, Micron reported revenue of $23.86 billion, a truly remarkable increase from $8.05 billion the previous year. The consensus estimate, compiled by the diligent chaps at LSEG, was a mere $20.07 billion. DRAM revenue more than tripled to $18.8 billion, while NAND revenue jumped by more than 2.5 times to $5 billion. Other revenue, too, enjoyed a respectable 27% increase to $95 million. A positively ripping performance, wouldn’t you agree?

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By segment, cloud memory revenue surged a staggering 163% to $7.75 billion, while core data center revenue climbed a rather impressive 211% to $5.69 billion. Mobile revenue jumped a cheerful 245% to $7.71 billion, and automotive & embedded revenue rose a respectable 162% to $2.71 billion. A veritable avalanche of good news, one might say.

Gross margins ballooned to 74.4%, up from a mere 36.8% a year ago, and 56% in the previous quarter. A truly astonishing improvement, and a testament to the company’s efficiency. Adjusted earnings per share – or ‘EPS’ as the financial scribes call it – came in at $12.20, compared to a paltry $1.56 a year ago. The analysts, it seems, were expecting $9.31. A most agreeable surprise, wouldn’t you say?

Looking ahead, Micron anticipates revenue of between $32.75 billion and $34.25 billion for the fiscal third quarter, with gross margins of around 81%. They are expecting adjusted EPS of between $18.75 and $19.55, while the analysts were anticipating $12.05 on revenue of $24.3 billion. A decidedly optimistic outlook, and one that suggests continued success.

A Worthy Investment, Perhaps?

One could scarcely have asked for a better report or more encouraging guidance. The stock, trading at below 8 times fiscal 2027 estimates on a forward price-to-earnings basis, appears, at first glance, to be remarkably cheap. The main question, of course, revolves around the cyclical nature of the business. Will this prosperity endure, or is it merely a temporary respite before the inevitable downturn?

Micron’s gross margins, however, offer a rather compelling clue. They are now on par with those of Nvidia, a company that has, of late, been the darling of the investment world. HBM has become as integral to the AI data center build-out as GPUs, and if high AI infrastructure spending is indeed the new normal, then Micron is exceptionally well-positioned for the long term. A most promising situation, wouldn’t you agree? As such, I believe investors might consider buying any small dip. A dash of prudence, of course, is always advisable, but the outlook, on the whole, appears decidedly bright. A rather splendid state of affairs, wouldn’t you say?

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2026-03-22 18:43